Retail Apocalypse: Why Are Major Retail Chains All Over America Collapsing?

By Michael Snyder February 17th, 2013

If the economy is improving, then why are many of the largest retail chains in America closing hundreds of stores? When I was growing up, Sears, J.C. Penney, Best Buy and RadioShack were all considered to be unstoppable retail powerhouses. But now it is being projected that all of them will close hundreds of stores before the end of 2013. Even Wal-Mart is running into problems. A recent internal Wal-Mart memo that was leaked to Bloomberg described February sales as a "total disaster". So why is this happening? Why are major retail chains all over America collapsing? Is the "retail apocalypse" upon us? Well, the truth is that this is just another sign that the U.S. economy is falling apart right in front of our eyes. Incomes are declining, taxes are going up, government dependence is at an all-time high, and according to the Bureau of Labor Statistics the percentage of the U.S. labor force that is employed has been steadily falling since 2006. The top 10% of all income earners in the U.S. are still doing very well, but most U.S. consumers are either flat broke or are drowning in debt. The large disposable incomes that the big retail chains have depended upon in the past simply are not there anymore. So retail chains all over the United States are now closing up unprofitable stores. This is especially true in low income areas.

When you step back and take a look at the bigger picture, the rapid decline of some of our largest retail chains really is stunning.

It is happening already in some areas, but soon half empty malls and boarded up storefronts will litter the landscapes of cities all over America.

Just check out some of these store closing numbers for 2013. These numbers are from a recent Yahoo Finance article...

Best Buy

Forecast store closings: 200 to 250

Sears Holding Corp.

Forecast store closings: Kmart 175 to 225, Sears 100 to 125

J.C. Penney

Forecast store closings: 300 to 350

Office Depot

Forecast store closings: 125 to 150

Barnes & Noble

Forecast store closings: 190 to 240, per company comments

Gamestop

Forecast store closings: 500 to 600

OfficeMax

Forecast store closings: 150 to 175

RadioShack

Forecast store closings: 450 to 550

The RadioShack in a nearby town just closed up where I live. This is all happening so fast that it is hard to believe.

But the truth is that those store closings are not the entire story. When you dig deeper you find a lot more retailers that are in trouble.

For example, Blockbuster recently announced that this year they will be closing about 300 stores and eliminating about 3,000 jobs.

Toy manufacturer Hasbro recently announced that they will be reducing the size of their workforce by about 10 percent.

Even Wal-Mart is going through a tough stretch right now. According to documents that were leaked to Bloomberg, Wal-Mart is having an absolutely disastrous February...

Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy, according to internal e-mails obtained by Bloomberg News.

In case you havent seen a sales report these days, February MTD sales are a total disaster, Jerry Murray, Wal- Marts vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. The worst start to a month I have seen in my ~7 years with the company.

So what in the world is going on here?

The mainstream media continues to proclaim that we are experiencing a robust "economic recovery", but at the same time there are a whole host of indications that things are continually getting worse.

Even global cell phone sales actually declined slightly in 2012. That was the first time that has happened since the last recession.

Perhaps it is time that we faced the truth. The middle class is shrinking, incomes are declining and there are not nearly as many jobs as there used to be.

Mort Zuckerman pointed this out in a recent article in the Wall Street Journal...

The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses only 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all.

So how can the mainstream media be talking about how "good" things are if we still have 6.4 million fewer jobs than we had back in November 2007?

And sadly, things may soon be getting a lot worse. If Congress does not do anything about the "sequester", millions of federal workers may shortly be facing some very painful furloughs according to CNN...

Federal workers could start facing furloughs as early as April, according to federal agencies trying to prepare for the worst.

Unless Congress steps in, some $85 billion in massive spending reductions will hit the federal government, doling out furloughs to much of the nation's 2.1 million federal workforce, experts say.

If you still live in an area of the country where the stores and the restaurants are booming, you should be very thankful because that is not the reality for most of the country.

I often write about the stunning economic decline of major cities such as Detroit, but there are huge sections of rural America that are in even worse shape than Detroit in many ways.

For example, many Indian reservations all over America have been shamefully neglected by the federal government and have become hotbeds for crime, drugs and poverty.

Business Insider recently profiled the Wind River Indian reservation in western Wyoming. The following is a brief excerpt from that outstanding article...

The Wind River Indian Reservation is not an easy place to get to, but I had to see it for myself.

Thirty-five-hundred square miles of prairie and mountains in western Wyoming, the reservation is home to bitter ancestral enemies: the Eastern Shoshone and Northern Arapaho tribes.

You can see some amazing photos of the Wind River Indian reservation right here.

It is hard to believe that there are places like that in America, but the truth is that conditions like that are spreading to more U.S. communities with each passing day.

We are a nation that is in an advanced state of decline. But as long as the financial markets are okay, our leaders don't seem too concerned about the suffering that everyone else is going through.

In fact, former Federal Reserve Chairman Alan Greenspan essentially admitted as much during a recent interview with CNBC. The following is how a Zero Hedge article summarized that interview...

Starting at around 1:50, Greenspan states the odds of sequester occurring are very high - in fact, the playdough-faced ex-Chair-head notes, "I find it very difficult to find a scenario in which [the sequester] doesn't happen" But when asked how this will affect the economy, Awkward Alan is unusually clearly spoken - "the issue is how does it affect the stock market."

While not so many of our leaders have taken the path to direct truthiness, Greenspan somewhat shocks a Botox'd and babbling Bartiromo when he admits "the stock market is the key player in the game of economic growth."

Bartiromo shifts uncomfortably in her seat, strokes her imaginary beard and stares blankly as Greenspan explains that while the sequester will have a real effect on the real economy, "if the stock market can hold up through this, then the effect will be rather minor."

Do you see?

As long as the stock market is moving higher they think that everything is just fine and dandy.

And the Obama administration?

They continue to pursue the same policies that got us into this mess.

Their idea of "economic reform" is to threaten to sue businesses that do not hire ex-convicts.

And of course now that Obama has been re-elected he is putting a tremendous amount of effort into "stimulating the economy".

For example, he spent this weekend golfing in Florida, and the Obamas recently spent about 20 million taxpayer dollars vacationing in Hawaii.

I am so sick of hearing that we’re doing fine because we’re in the top 10 percent of income. Bologna! We’re in the top ten percent of income and we most definitely are belt tightening and coupon clipping in ways we haven’t done in many, many years. I’ll bet most everyone I know in my family and geographic area is not only in the top 10 percent, but more like top 2 percent of income. And you know what? I’m better off than just about all of them because our kids are grown. We’re done paying for school and braces, etc.

The government dependence thing is interesting. My neighbor fought for years to get to full disability. After being turned down repeatedly in court, he finally got it last year. It was celebration time. He works a garden, has horses, but has disability.

And I just joined a band where the leader fell off a roof (he’s a roofer) and is going for full disability. He lives for fee on an elderly lady’s farm in a house that is such a dump that one of the exterior walls is missing it’s skin, showing what is left of the fiberglass insulation and interior wall. But he pays no rent. It’s a good thing because he gets ALL of his income from playing in a bar band. He’s ridiculously good, though...

The mainstream media continues to proclaim that we are experiencing a robust "economic recovery", but at the same time there are a whole host of indications that things are continually getting worse.

The media has no interest in reporting any factual data like this the public - they have much more important things to spend their time reporting - such as Marco Rubio drinking water when his throat gets dry as a major, horrific scandal of epic proportions.

They continue to report a good Obama economy even with GDP dropping 0.1% in the last quarter.

What we have failed to recognize is that manufacturing is a critical part of finances.

We cannot import things, without exporting an equal amount.

We cannot.

We need a balanced budget. We need to receive in our export account as much, as we spend on our import accounts. We do not.

That is what is happening to our economy. And nobody is saying one single word about it. Not Dems. Not Republicans. I am really hoping to hear something to this regard out of the Tea Party, but still waiting.

We traveled North America by RV for three years from 2006 to 2009. Visiting many suburban malls just doing our needed shopping. We got the distinct impression that many of these malls and big box stores were built in advance of population around them. The industry just seemed over built and over stocked for the traffic they were getting. Now, with online shopping and high gas prices..people are using online a lot more. I just finished an order 10 minutes ago..no use going out and visiting three or four stores finding a product that fit me.

Incomes are declining, taxes are going up, government dependence is at an all-time high, and according to the Bureau of Labor Statistics the percentage of the U.S. labor force that is employed has been steadily falling since 2006.

Mission Accomplished!

So say Obama and the democrats.

The biggie for the democrats was creating more dependence on government, which means that, they will have a much bigger pool of democrat voters, and dominance by the democrats for a long time.

Never mind that there will be pain along the way for many millions; it's the results that count, and what counts for the democrats, is creating government dependence. Party before country!

While I agree with most of what you wrote; and while I also agree that many economic indicators are not positive -- I'm compelled to point out that the closure of giant chain stores is not one of those negative indicators. At other times, the closures could be a negative indicator; but, in this instance they are an indicator of something working right.

The giant chain stores mentioned have simply failed to evolve fast enough, in the face of the Internet commerce revolution. The problem isn't that people have stopped buying the type of merchandise these stores sell -- it's that people are buying the merchandise from on-line retailers instead. Consumers (i.e. us) want the lowest prices, and the best shopping experience. Unfortunately, for the giant bricks & mortar chains, the best prices and best shopping experience are in cyberspace.

Every recession precipitates some overdue changes. In an ordinary, business-cycle type recession, the changes might be nothing more than adjusting inventories. In a secular recession (or depression, if you prefer), major structural changes occur. The economy that emerges from the recession (depression) is more efficient and more productive. On average, everyone is better off. (That's the "greater-good" argument; and it does gloss over the pain and suffering of those most directly affected by the changes. In this case, the owners and employees of giant chain stores.) In a real sense, recessions are a necessary evil.

This is just the latest example of the "creative destruction" that Schumpeter (amongst many other economists) recognized as the greatest strength of free-enterprise capitalism. The very worst thing would be for government to step in and "do something" (for instance "rescuing" the giant chain stores). The big chain stores displaced the small independent stores on Main Street -- now, it's their turn to give way to a different business model.

The MSM is parroting the crap that the Food Stamp President’s administration puts out. If they could view themselves honestly, they would realize they are the new communist propaganda machine. Having visited several communist countries in the 70s, it is eerie and scary to see the MSM emulate the old communist propaganda machine.

The desired solution is wage inflation to counteract the wage cut resulting from resumption of the payroll tax. Unions and minimum wage increase demands will force the issue. The wage inflation must be kick started and the tax resumption provides the kick.

——As long as the stock market is moving higher they think that everything is just fine-——

I think his thoughts were misinterpreted. He is saying the stock market represents the collective minds of the market and if the market minds reach consensus the problem is slight the market will keep on keeping on.

The desired solution is wage inflation to counteract the wage cut resulting from resumption of the payroll tax. Unions and minimum wage increase demands will force the issue. The wage inflation must be kick started and the tax resumption provides the kick.

——As long as the stock market is moving higher they think that everything is just fine-——

I think his thoughts were misinterpreted. He is saying the stock market represents the collective minds of the market and if the market minds reach consensus the problem is slight the market will keep on keeping on.

Ahhh..... I had my daily Blam fix after missing two days. I feel better already

We lived for maybe two hundred years with a trade deficit. We have been a nation of importers since before we were a nation.

You can’t see or won’t see that the past is gone. The world has changed and not like it was in your good old days.

You chose anomaly as the norm and erronously think the age of manufacturing with no competition is normal. Alvin Toffler described that condition as future shock.

I would suggest you buy and read Forbes from cover to cover every two weeks or perhaps read it on line. You will learn not only about the world but about the truly exciting things happening in the world of American business. The future depends on that which will be..... not that which was.

no use going out and visiting three or four stores finding a product that fit me.

I think you’re right on. The brick and mortar stores don’t have the variety that online does. I just bought a quality flashlight online. In the old days I would have gone to different stores and probably wouldn’t have found satisfaction.

Brick and mortar stores don’t have every model and type. They couldn’t afford to stock such a variety of products. Online stores are jammed with everything and anything a buyer might want and then deliver your order right to your door. No gas, no fuss, no parking, no security concerns and no trying to find help that isn’t available or doesn’t know their products.

I have to say, part of this is a shift in how we shop. My son bought everything for Christmas, online. I came home from work, for lunch, in December, a UPS truck was coming up one side of the street, and a FedEx truck was coming in the opposite direction, both stopping to deliver packages, up and down our street. It struck me - we don’t got to the mall, any more, the mall comes to us. Please understand, I am NOT a defender of the 0 economy, just an observation. Thanks.

Most of those companies deserve to close. They are not keeping up with the changes necessary to keep in business. Seriously, Best Buy? Really? Nobody is buying DVDs or music anymore. Everything is purchased through Amazon or people have Netflix, Hulu, or/and Amazon Prime. Any video type store is on life support. Office Depot? Really? Nobody goes there anymore.K-Mart? Losey store that is dirty. Walmart is a million times better. Every company mentioned does not surprise me....except Barnes and Nobel sorta because at least they are trying to keep up with technology but it won’t be enough obviously.

You can see some amazing photos of the Wind River Indian reservation right here. It is hard to believe that there are places like that in America, but the truth is that conditions like that are spreading to more U.S. communities with each passing day.

This makes no sense whatsoever. I really thought that all these entitlements, welfare, extended unemployment, extented unemployment extensions, foodstamps, and on and on were stimulating. With so much of all this, you’d think we’d be in BOON times.

41
posted on 02/22/2013 3:19:59 PM PST
by C210N
(When people fear government there is tyranny; when government fears people there is liberty)

“Change the tax code, and encourage manufacturing to return to America.

It is that simple.

Build stuff here.”

To the founding fathers, free trade meant citizens of the US were free to trade with any country, not that every country in the world had open access to the US market. From the time of the founding until the 20th century US tariffs on imports were high In fact until the passage of the income tax amendment to the Constitution in the early 20th century, the federal government was funded by the tariff. Contrary to the propaganda spread by free traders, the economic infrastructure of the US was built during periods of high tariffs creating unprecedented prosperity for the citizens.

The founding fathers would have a simple prescription for our economic ills:

1) Reduce the size of government dramatically. Limit the federal government to specifically enumerated powers and responsibilities.
2) Raise tariffs to levels required to 100% fund the government and pay down the debt (exactly what Alexander Hamilton did to pay off the Revolutionary War debt for an insolvent new nation).
3) Go back on the gold standard, mint gold coinage.
4) Eliminate the Federal Reserve. Have the Treasury issue money, backed by gold and silver.
5) Eliminate the income tax.
6) Reform tort law
7) Watch the economy boom.

44
posted on 02/22/2013 3:23:07 PM PST
by Soul of the South
(Yesterday is gone. Today will be what we make of it.)

“Change the tax code, and encourage manufacturing to return to America.

It is that simple.

Build stuff here.”

To the founding fathers, free trade meant citizens of the US were free to trade with any country, not that every country in the world had open access to the US market. From the time of the founding until the 20th century US tariffs on imports were high In fact until the passage of the income tax amendment to the Constitution in the early 20th century, the federal government was funded by the tariff. Contrary to the propaganda spread by free traders, the economic infrastructure of the US was built during periods of high tariffs creating unprecedented prosperity for the citizens.

The founding fathers would have a simple prescription for our economic ills:

1) Reduce the size of government dramatically. Limit the federal government to specifically enumerated powers and responsibilities.
2) Raise tariffs to levels required to 100% fund the government and pay down the debt (exactly what Alexander Hamilton did to pay off the Revolutionary War debt for an insolvent new nation).
3) Go back on the gold standard, mint gold coinage.
4) Eliminate the Federal Reserve. Have the Treasury issue money, backed by gold and silver.
5) Eliminate the income tax.
6) Reform tort law
7) Watch the economy boom.

46
posted on 02/22/2013 3:26:56 PM PST
by Soul of the South
(Yesterday is gone. Today will be what we make of it.)

A large part of the brick and mortar retail collapse is the move from physical to virtual shopping, including instant delivery of goods throught the internet. Getting what you want the same day you buy it used to be the exclusive domain of brick and mortar store, but now movies, games, and music are all downloadable from the comfort of your couch.

The internet also allows low-effort comparison shopping and fewer trips to stores, sauntering around the mall all day to see which stores had the best products and prices aren’t done with the same regularity as before. Even a trip to a store to handle a product one intends to purchase doesn’t mean that they’ll buy, since smartphone apps allow instant scanning and price comparison of product bar codes.

Many retail stores, as they operate today, are naturally going to either change or fail the same way general stores had to change or fail when Sears came to dominate the market, and town center stores fell apart when shopping plazas were built on town outskirts.

The current business environment isn’t the cause, but the policies of the government which discourage risk and investment if they don’t favor the administration’s goals of the moment aren’t helping anything.

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